Insurance Coverage for Older Car

I have a 2003 Toyota Corolla that will be paid for by the end of this year. Is it necessary to continue having full coverage auto insurance on it, or is liability sufficient?

By Onesummer

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I would contact your insurance agent with your concerns. I think they would have the best answers for your minimal coverage. For example on a car that old do you need fire and thief?

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It is not necessary to have full coverage insurance. You can drop your coverage to PLPD (personal liability & property damage) but it would make it so if you have a wreck and its your fault, your car would not get fixed but insurance would still fix the other vehicle you hit if applicable. We keep fire, theft, and deer coverage on everything driven also but we live in Indiana. I think it makes me drive more careful knowing we would have to pay to fix it. Have you thought of raising your deductible. Lots of times it can be a good cost savings. Hope this helps.

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We had a paid-off '95 Accord (I loved that car . . . in 10 years we only had to do maintenance) and were rear-ended at a high rate of speed. We have no reason to believe the car would have had any mechanical problems any time soon . . . the value of no payment is more than we think. The car was totalled, and their insurance didn't want to give us much for it. (We had just liability since the car was 10 years old.) My husband works for a local auto group and kept extremely good records of all maintenance, and he had the manager at the Honda dealership write a letter estimating what our car was worth before being wrecked (we took extremely good care of that car). So the insurance gave us maybe another $1,000 or so.

We had to get another car. Even with my husband's connections we couldn't find a good newer-used Honda (or Toyota). So we ended up buying new. We had savings, but not enough to pay for a brand new car in full. So we had to finance and got it paid off in a couple years.

Full coverage would have helped when getting the new car. It's debatable whether or not the added expense of the insurance is worth it. WE are very safe drivers, but someone else was being careless and hit us (with a cop sitting next to us, and another two cars behind him!). We could go another 10 years without an accident, or we might get hit today driving to a birthday party. But we have enough savings to get a new car today, if we need to.

There is much to consider. It's not an easy question to answer. Look at all your options and possibilities, crunch some numbers. If something happened and your car was totaled today, how would you handle it? Best of luck. Even though our car is paid in full, we continue to carry full coverage. In a few years we'll sit down and have a discussion as to whether or not we'll continue.

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Don't go bare minimum liability, make sure you are protected if you are at fault but drop the full coverage. Even if you have full coverage, your insurance company is only going to give you current market value or maybe a little over to make you happier but you will not get what you think it is worth, insurance companies do not increase value because it has been a good car for you.

Personally, I buy cheap, carry liability and drive them til they drop. I have saved many thousands of dollars on car payments and full coverage insurance payments over the years. I have taught myself to do many basic repairs so I am lucky in that sense. It has helped us raise 3 kids on one income and even though there are days (like this one- I have to fix our 94 minivan that won't start) that I would love a new car with a warranty, I will never regret going thrifty so my kids have a mom at home.

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I always had full coverage on any of my cars that were paid off, mainly because I couldn't afford to buy a different car or replace a broken windshield, etc. I haven't had a car since 1997 and back then I was paying $40.00 a month for complete coverage and my renter's insurance. With my renters I had it so that if I lost stuff in a fire or whatever, I could go out an buy completely new stuff. To me it is worth it to have more coverage than you might need, especially with people so sue happy now a days.

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If you contact your insurance agent about this issue as someone suggested, t's in their best interest to tell you to keep full coverage. That agent is in the business to sell insurance (he gets a commission) and if you think he has your best financial interest in mind you're fooling yourself.

General rule of thumb: drop full coverage when the car is five years old if it's paid off and save the difference in premiums. If it's financed the bank will require full coverage to protect themselves. If your car is totaled your insurer will pay you next to nothing depending on the mileage and condition of the car. I always drop full coverage on my cars when they reach 5 years old, and keep uninsured motorist. Just keep uninsured motorist protection.

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PLPD will be fine if you're not worried about being able to replace or repair the vehicle out of pocket but if you don't have medical that would cover should you be injured by an uninsured motorist it's advisable to also have uninsured motorist coverage. My car is ten years old and only worth about $3,000.00 and I have medical that would cover so I dropped to only PLPD only and it cut my insurance rate in half. I put what I save aside for possible future repair or replacement 'just in case'.

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Liability will suffice but comp is good to keep especially if your auto is on the top 10 list for most stolen cars.

Comp is also coverage against fire and theft. So you may want to keep it; its usually a pretty low cost. In our state-Texas, we have uninsured/underinsured motorist and some folks keep this one on, too.

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